Landlords who fall within the scope of the Tenancy Law of 1983 (23/1983) as amended (hereafter “the Law”) can increase their tenants’ rents by a maximum of 6% after a decade zero increase in rents.
In particular, the two decrees issued pursuant to the Law, on April 12, 2023, and published in the Republic Gazette on April 13, 2023, are as follows:
Pursuant to Article 8(4)(a) of the Law
The Council of Ministers, exercising the powers granted to it by paragraph (a) of subsection (4) of article 8 of the Law, and following the recommendation of the Minister of Justice and Public Order, determined the rate of 6%, as the upper limit of rent increases for the two years starting from April 22, 2023 until April 21, 2025.
Pursuant to Article 19(2) of the Law
The Council of Ministers, exercising the powers granted to it by subsection (2) of article 19 of the Tenancy Laws of 1983 until 2020, upon the recommendation of the Minister of Justice and Public Order, determines, for the purposes of the aforementioned article, as a percentage ratio rent increase for shops in a disadvantaged area, 6%, for the two years starting from April 22, 2023 until April 21, 2025.
The Law sets specific exceptions to the properties that fall within its scope, such as properties used for agricultural purposes, petrol stations, motor vehicle parking spaces, rentals of furnished houses or apartments for a period of less than six months and hotel units.
The above decrees concern rental properties, i.e. properties where the construction of the property has been completed by 12/31/1999, the property was rented or offered for rent on 12/31/1999, there is a rental agreement and the first tenancy agreement has expired or terminated and the tenant still owns the property, i.e. become an established tenant.
As can be seen from the above decrees, the increase can be requested by the owner immediately if it concerns the period mentioned above. Therefore the tenant is obliged to pay the increased rent immediately, however no reference is made to criteria for the increase in question and therefore the exact amount is up to the owner.
Request for a rent increase
The property owners who fall within the scope of the Law as analyzed above, retain the right to apply for an increase in the rent to the Rent Control Court in case they consider that the amount of the rent is not fair, given that no application is registered before the lapse of two years from the date on which the tenant obtained possession of the property or from the date of the last rent increase or decrease as provided for in article 8(2) of the Law.
It is also important to mention that the upper limit of the increase of the legal rent determined by the Court, as provided for in article 8(4)(a), will not exceed the percentage that the Council of Ministers determined in the above decrees.
But based on the provision of the Law, in a case where the determination of the fair rent based on the decree of the Council of Ministers, leads to a rent lower than 90% of the rents of the small area, then an equal rent is determined. In general, a small area is considered the neighbourhood, the building square, the adjacent and opposite buildings, on the same street. The “small area” cannot be limited to a specific area, but its scope depends each time on the facts of each case. Therefore, in case the rent paid is lower than 90% of the average rents of the small area, it can be increased and determined based on the percentage of 90%, and in the case of a displaced or suffering tenant, the percentage cannot exceed 80%.
It is equally noteworthy to mention that in case the owner registers a request for a rent increase in the Rent Control Court for the first time, then the amount of the increase is determined at a rate of up to 6% of the last rent or at 90% of the average rents of the small area, whichever is greater.
In addition to the above and in accordance with Article 8(5) of the Law, in order to determine a fair rent, it is necessary to prepare a report by a valuation officer of the Court following relevant instructions or a relevant report by a private real estate appraiser expert in which reference and to calculate the market rent and the average rents of the small area, as well as taking into account all circumstances (except personal) including the age, size, character, location and condition of the property and in the case of a preserved building, whether works have been carried out on it by its owner and at what cost, as well as the facilities provided to it. In summary, the Court will be asked to decide based on the assessment that will be presented before it whether the rent paid is high or low or fair.